Farmers union steps in with plan for insurance

Proposed co-op geared to rural areas, but open to all

The Rocky Mountain Farmers Union says the costs of health insurance has become so high that many people who work in Colorado’s rural areas carry policies that cover them only in case of a dire emergency. So the union is seeking to do for health care what it has done successfully for milk, livestock and equipment: form a cooperative.

The idea, officials say, has the potential to make care more affordable for the one-third of Colorado’s estimated 5 million residents who either have no health insurance or are considered underinsured. While the focus would be on rural residents, all Coloradans would be eligible.

“It’s not universal health care,” said Lindy Wallace, president of the board overseeing the Colorado Health Insurance Cooperative Inc. “It is, though, an opportunity for people to have a voice in how they get their health care and how much their health care costs – and in taking more responsibility for their own care and learning about that.”

The farmers union, with a membership of 22,000 families in three states, recently submitted an application to create the nonprofit co-op in Colorado under the federal Patient Protection and Affordable Care Act. The co-op would be unique in that it would eliminate profit motivations by placing consumers in majority control of its board of directors. Patients who use the plan would have more direct say in which benefits are offered and how to compensate administrators.

Instead of lining the pockets of CEOs, profits could be used to “reduce premiums or improve benefits or improve the quality of care,” Wallace said.

If approved, details of the cost and specific benefits would be unveiled in late 2013. The insurance co-op would go on the market in 2014.

Dr. Michael Pramenko, a Grand Junction doctor who served on the federal board creating such Consumer Operated and Oriented Plans – or CO-OPs – described them as “a pathway for greater cost control.” Boards would be motivated, he said, to provide efficient and affordable plans, because they are directly accountable to members.

For-profit insurers can’t generate the “same level of trust” as a co-op, Pramenko said, because they don’t have such built-in accountability.

The farmers union is seeking as much as $70 million in low-interest loans, including start-up money and funds that back the insurance it will provide. About 175,000 more Coloradans could be insured through the co-op in the decade or so to come, Wallace said.

The prospective co-op is seeking doctors around the state to commit to accepting patients on the plan. However, it is unclear whether the federal government will approve the application. Each state is eligible to have at least one co-op; a spokeswoman with the Department of Health and Human Services declined to say whether the federal government has received any co-op applications from Colorado.

If approved, Wallace said the co-op’s “intent is to make (prices) very competitive.” The price could hinge on myriad options – including the level of dental care or whether discounts at health clubs are offered. The monthly premiums, she said, could range from $300 to $500 – an amount she concedes could “probably” surprise consumers unfamiliar with the high costs of health care.

As reported in a recent Colorado Public News story, a survey conducted by The Colorado Trust found that about 35 percent of Coloradans said they could afford no more than $50 a month for insurance. Ten percent indicated they could afford just $25 or less. But insurance currently averages $182 a month per person in Colorado, and can easily top $700-$1,000 for people older than 55 or with health problems.

Wallace said under the co-op, people with lower incomes may qualify to pay on a sliding scale under the Affordable Care Act.

“So their out-of-pocket might be in the $50 range (a month) with a subsidy from the federal government,” she said.

Dede de Percin, executive director of Colorado Consumer Health Initiative, said insurance co-ops could be a factor in keeping health-care costs from rising as rapidly as the current trend.

“The increased competition among insurers in that marketplace is also going to help contain costs,” de Percin said. “Whether they’ll actually go down, I can’t really say.”

Wallace identified another hurdle for the co-op: the Supreme Court, which could strike down all or part of the Affordable Care Act. If the court removes the individual mandate requiring all Americans to purchase insurance or face fines, co-ops may be untenable.

Without the mandate, the anticipated rush of uninsured and underinsured individuals seeking coverage by the 2014 deadline probably wouldn’t happen. That would make it harder for a co-op – or any insurer – to offer more affordable plans to consumers, Wallace said.